Also published on the Huffington Post
It seems like most real estate markets in the country are on fire right now, with homes flying off the market in days, sometimes hours. Sometimes they never even hit the market. It seems, according to agents around the country, that there is quite a demand in many cities. Of course DC is no exception.
Buyers inside the beltway are often conditioned to believe they have to throw caution to the wind and just bid that price up no matter what. I try to discourage my clients from getting caught up in the fury though. Just because an open house is well attended (okay, packed so tightly you can’t breathe) doesn’t mean there will be a dozen offers with huge escalations. Similarly, an open house can be dead and the home could somehow elicit multiple offers. Basically - make no assumptions.
I wrote several weeks ago about clients of mine who walked into an open house and were convinced by the listing agent that the house would go fast and they needed to write an offer right then and there - conveniently with the listing agent (to be fair, a member of their “team.”) As someone who has been doing this a while, I am simultaneously amused and sad. Amused because I can’t believe that “hurry before it’s too late” actually worked on someone and sad because it did, and clients allowed themselves to get sucked into an agent-engineered, non-existent bidding war. The house was on the market a couple weeks at that point. Isn’t the listing agent’s job to get the most money for their listing? Yes. And wouldn’t that happen if they waited a few days after the open house to collect multiple offers and play them against each other instead of giving one buyer an inside scoop? Yes. But sometimes buyers don’t see that - especially if they’re brand new to the game. They think somehow this person is looking out for them, and into the trap they go.
I urge everyone I work with to operate without fear, to take a deep breath and only proceed with a calm, level head. It doesn’t always work, but it doesn’t stop me from trying.
Recently I had clients who had to test the market and their desire to compete here when faced with a good house in a great location, priced about $200,000 too high. Seems the sellers overpaid 2 years back and are now trying to just break even. Markets don’t work like that unfortunately. In conversations with the listing agent, we each pointed to comparable sales that supported our respective client’s position. I was told the house was comparable to House X down the street, but I pointed out that house had a garage and 600 extra square feet. I used House Y for a comparable and was told that house was not in as nice condition as this one and the pictures were deceiving. Does any of this matter? Not really.
What matters is what the house is worth to a buyer. Not what the houses around it indicate its worth. Not what the seller paid 2 years ago. I had a listing that should have sold for $15,000 higher than it did, but timing, weather and other forces came into play to knock that price down below where I felt it should have been. And what mattered in that case was what it was worth to the buyer of the home - which ultimately then becomes the new “market price.”
So back to the house my clients were considering. The listing agent said they didn’t believe the right price was the list price but they felt, based on the comps that it was close, and didn’t my clients see that? I said, I think where we are right now is while there may be comps to support the price or something close to it, what my clients are operating with at this point is answering the question, “What is this house worth to us?” not, “What is this house worth?”
And that, should always be the question you answer in your house search. The listing price should be a starting point. The value to you as the buyer could be higher or lower than the list price. If there are other bidders who also want it and you don’t want to go above list price that’s totally fair. I personally would not and have never paid above list price on any home I’ve purchased. However, I am genetically hard-wired to feel like I got a deal on everything I buy. And if you don’t want to pay more than list price it just means it’s not worth that to you. And that is okay!
Don’t let yourself get sucked into the rabbit hole. There will be another house, there always is.